# December 14, 2010 Essential Air Service at

Grand Island, Nebraska OST 2002 13983 under 49 U.S.C. 41731 et seq

.

ALASKA JUNEAU AERONAUTICS, INC. DBA 

# SEAPORT AIRLINES

PROPOSAL TO PROVIDE ESSENTIAL AIR SERVICE AT Grand Island, Nebraska

DOCKET

2002 13983



## Alaska Juneau Aeronautics, Inc. dba SeaPort Airlines 7505 NE Airport Way, Portland, OR. 97217

# Company Overview

SeaPort Airlines is a d/b/a of Alaska Juneau Aeronautics*, an FAA certified scheduled air service provider with 27 years experience in commercial aviation. Our company’s foundation is built on efficient and reliable service to rural communities. Both SeaPort Airlines and our sister company Wings of Alaska currently operate routes under the Essential Air Service program, as well as un

- subsidized operations on established competitive routes

.
*Alaska Juneau Aeronautics, Inc. is in process of a name change to SeaPort Airlines, Inc. The corporate name and the certifi cat e of public convenience and necessity have been already changed, however the request to the FAA for name change for the air carrier cert ifi cate currently remains pending.



# Wings of Alaska is the premier airline serving Southeast Alaska. Providing scheduled passenger service, fast freight and charter service between Juneau and Skagway, Haines, Hoonah, Gustavus
, and weekly flights to Excursion Inlet. Wings of Alaska grew in reputation and size, becoming one of the most successful regional air carriers in Alaska, now comprised of a fleet of seven planes from Cessna 206 and 207’s to Cessna Grand Caravans.

# IT’S ABOUT TIME : SeaPort Airlines currently operates 30 daily scheduled flights in five Northwest cities and 32 daily scheduled flights in five Mid

- South cities. Effective April 19 th 

# , 2010 SeaPort Airlines began operating 8 daily flights in the Midwest.

EAS 6 Routes Speculative 1 Route State Contractual 2 Routes 

# SeaPort Airlines

# Bringing Southeast Alaska Closer Together: Wings of Alaska currently operates 38 daily scheduled flights to six Southeast Alaska cities.

Wings of Alaska

EAS 1 Routes Speculative 5 Routes

# SeaPort Airlines operates 7 Pilatus PC

- 12 aircraft. The PC

- 12 is a Swiss

- built pressurized turboprop aircraft typically found in corporate aviation, but utilized by SeaPort Airlines in a nine seat commuter configuration. The world's best

- selling turbine business aircraft, still in production today, the PC

- 12 can shuttle you with comfort and speed with each seat both a window and aisle.

Pilatus, the world market leader in the manufacture of turboprop aircraft and the only Swiss company to develop, produce and sell aircraft and training systems all over the world. http://www.pilatus

- aircraft.com 

# OurAircraft

## December 14, 2010 Alasks Juneau Aeronautics, Inc. dba SeaPort Airlines 

# Our President

Robert (Rob) L. McKinney:

• Graduate of Purdue University

- Aviation Technology, and holds MBA from Ellis College • Trained and experienced as commercial pilot in jets and turbo props, but always strived for opportunities to manage business aspects of flight operations in each company he served. • In September, 2007, enticed by original investors and founders of SeaPort Airlines to join as first employee, and tasked with establishing scheduled commuter airline service from Portland, OR to Seattle, WA. • Currently, a partial owner and President for SeaPort’s three bases of operation

– Portland, OR
, Memphis, TN, and Juneau, AK, and working to establish additional routes and expand schedules in each market. • Holds and utilizes vast knowledge of FAA regulations and has previous experience with Federal Regulators.



# “ **Growing up in a small town, I’m passionate about connecting rural America** 

**– the fabric of**  **our society.”**

# Whereas many communities have been promised service that has never transpired, SeaPort delivers Essential Air Service to seven communities: Excursion Inlet, Alaska, Pendleton, Oregon, Jonesboro, Arkansas, El Dorado, Arkansas, Hot Springs, Arkansas, Harrison, Arkansas, and Salina, Kansas. Additionally, SeaPort serves Newport, OR and Astoria, OR under a combined state and federal grant program.

In every case, after award, we have started on time, on budget, and with fares either at or below that which we outlined in our bid, as compared to so many other airlines who place bids with unreasonable fares that are never realized by the traveling public. 

# EAS History

# SeaPort proposes 2 direct round trips per day between Grand Island and Kansas City, 6 days per week, additionally SeaPort will offer 3 direct round trips per day between Grand Island and Denver, 6 days per week. This service level will offer more than enough inventory to provide for the historical traffic of the last several years, while keeping capacity “right

- sized” and avoiding an unnecessary flooding of empty seats and resulting higher operating costs. Please see Exhibit “2” for details.

SeaPort has constructed the schedule to maximize traffic flow with flights morning, midday and evening. SeaPort believes that traffic will increase in year two as the speed and convenience of our service become more familiar to the residents of these communities.

In addition, a daily plane overnight in Kansas City adds reliability to the above schedule recommendation similar to the overnight success SeaPort experiences in our other EAS cities.

We are therefore able to offer these communities the best possible fit with:

• Comfortable and fast pressurized Pilatus PC

- 12 aircraft

• Convenient schedules

• Affordable fares

• A reasonable and sustainable subsidy amount 

# Right

**- Sized for**  **Grand Island**

# SeaPort Airlines emphasizes customer service and convenience, and in so doing our platform is reminiscent of commercial air service of the past in that our passengers only need to arrive 20 minutes prior to departure from any of our terminals.

In Kansas City and Denver, SeaPort would use the business aircraft center for an enhanced travel experience. From either terminal we will provide complimentary shuttle van service to and from the main terminal for those passengers needing to connect to, or returning from, more distant destinations. This model has proven itself well at our hub in Portland, OR, Memphis, TN, and Kansas City, MO and is no less convenient than a typical gate change

— only with this one you get a complimentary shuttle ride.

Further, a no

- TSA model will offer the communities tremendous appeal for quick trips to and from Kansas City, or other potential major market connections to be served by SeaPort. Finally, a

no

- TSA model has the greatest potential to draw business and leisure traffic from San Diego and Phoenix that would otherwise travel by highway if a traditional TSA

- restricted airline was the only flight option.

Lastly , the $79 and $109 dollar fares in our proposal is an average fare. Travel to Kansas City or Denver will be as low as $59.00 one way. This fare is far less than the
current operator. 

# SeaPort’s **Proposed Plan**

# SeaPort Airlines is unique in that it proactively markets to travelers the ease and convenience of by

- passing TSA security screening. Below are a few inherent cost saving benefits and customer benefits passed to you the airport when partnering with a carrier such as SeaPort Airlines:

• Lower fares thanks to no gate fees

• Increase reliability in arrival and departure times

• Quicker turn times

• Arrive just 20 minutes before departure, board, and go

• No Body Scanners. No rubber gloves. No need to take your shoes off.

• Complimentary shuttle service to and from the main terminal 

# No lines, never any waiting

WE FOUND WHAT AIR TRAVEL LOST: EASE AND CONVENIENCE

#  March 2010 full GDS connectivity ( Sabre
, Worldspan , Apollo, Galileo, and Amadeus)

 January 2011 full Online Travel Agency availability, (Expedia, Orbitz , Travelocity)

 Interline agreement with USAirways

 Reservations available online at SeaPortAirlines.com, toll

- free at 888.573.2767, or through local travel agents

 Low Fares thanks to low operating costs and efficient aircraft equipment

 High

- frequency , non

- stop daily service

 Customer focused bringing the convenience of a private plane to the average traveler for the same cost as commercial airlines. 

# Efficiency & Reach

## December 14, 2010 

# Current Service

Great Lakes Aviation is the current air service provider for Grand Island, Nebraska with nonstop to Denver. Non

refundable fares, range from $109.00 to $299.00 per segment based on availability and time of booking.

SeaPort Airlines is exploring greater connection options for Grand Island travelers to Kansas City.

What can the Grand Island Airport Authority expect from SeaPort Airlines:  Notification of any fare/schedule changes  Community involvement through advertising/marketing  A cohesive partnership focused on economic development and increased load factors  Affordable fares  A hassle

- free travel experience for your community

# EAS Testimonial

Larry Dalrymple

– Airport Manager : “Eastern Oregon Regional Airport at Pendleton had been struggling since schedule changes following 9/11 served by a carrier flying 37 seat aircraft. Low passenger count attributed to poor schedule, which then contributed to poorer passenger count. The carrier's solution was to bring in larger aircraft and fly to a different hub. The Airport and community balked at this suggestion and went in search of alternatives. The solution found through the EAS process was SeaPort Air flying a 9 passenger Pilatus, that would eliminate the need for TSA security as well as mandatory ARFF standby, saving the Airport personnel costs in an already short budget. The passengers have welcomed the new service, much better schedule, and are elated with "no security check" and stand by time. Passengers today will say, "I love the service", "great customer service", and "I'm sure glad I finally tried it, cause I'll be back".

In our particular market, the 9 passenger aircraft is perfect, and SeaPort Air provides the schedule, the professionalism, and customer service we need and desire.” 

# Pendleton Regional Airport

## December 14, 2010 Alasks Juneau Aeronautics, Inc. dba SeaPort Airlines 

# Luci Larson

– Former Mayor of the city of Salina Kansas & owner of Action Travel: The Department of Transportation (DOT) announced on the selection of SeaPort Airlines as Salina’s new essential air service provider. Service to Salina from Kansas City will start as early as April 19 th 

## with three daily roundtrip flights Sunday through Friday.

“I understand the importance of having dependable, reliable air service with an affordable cost. Not only will SeaPort Airlines meet these needs, but excel by providing great customer service, a high level of community involvement and an eagerness to become a Salina partner.” Says Luci Larson

- former Mayor of the city of Salina and owner of Action Travel. The letter supports a few key deliverables that only SeaPort Airlines can support, such as: greater frequency, a 9

- seat “right sized” aircraft, affordable fares, military/government fares, and an active community marketing plan. “I applaud their entrepreneurship and look forward to our working relationship. Their presence here in the Midwest is a win

- win situation for all of us. The "door

- to

- door" service they will provide will be truly appreciated by all passengers. Want to travel like rock star? Fly SeaPort Airlines!” Says former Mayor Larson. 

# EAS Testimonial

**Salina Municipal Airport**

# Customer Feedback

Ruth Ann Smith

– Hot Springs to Memphis: “Two hours before the flight I booked my ticket to Memphis from Hot Springs. Wow! What a surprise; it was simple, convenient, great price, and impeccable service. It far exceeded my expectations and I will be flying to Memphis on SeaPort Airlines instead of driving from now on. The customer service was fabulous!”

Catherine Martin

– Memphis to Harrison: “I have never had such a positive experience connected with any airline. I read about Seaport Air last October when they opened the Mid

- South Route, but didn’t have the chance to fly until March. Usually the dread of the process comes then you just grin and bear it; however, with SeaPort Air I could arrive 15 minutes early. The hassle free no TSA is wonderful and made me feel special. I have flown twice in the last 2 months and the customer service from start to finish is outstanding. I will be a regular customer and have already recommended the airline to several associates. Thank you, SeaPort Air, for making me feel like a queen!”

Barbara Covell

– Portland to Newport: “This is a class operation, very professional and the staff provide the kind of customer service that most people can only dream about. I have flown several times in order to avoid the LONG car trip from the Oregon central coast to Portland airport. Today my husband had to get to the emergency room at Portland VA Medical Center. The staff and crew actually held the flight in Newport while we made haste to get there. If that wasn't enough, they had a taxi waiting when he arrived at Portland airport. Many, many thanks!”

## December 14, 2010 Alasks Juneau Aeronautics, Inc. dba SeaPort Airlines 

# Community Involvement

# Recent News

Economy doesn't ground airline start

- ups (click here) 

# USA Today :: 11/16/2009 “Too many small communities are ignored by large carriers.” “I have built a career giving service to small rural communities that are neglected by everybody else.” Rob McKinney
Scheduled air service returns to Region 8 (click here) 

# KAIT TV:: 10/26/2009

SeaPort Airlines will link Memphis and four Arkansas cities » The

... (click here) 

# Gloria Levston of Signature Flight Support adds fuel to a SeaPort Airlines Pilatus PC12 plane at the SeaPort facility at Memphis International Airport The

... 

# For a list of SeaPort news articles visit http://www.SeaPortAir.com/press

# Recent SeaPort News

‘This is a great day for El Dorado’ SeaPort Airlines welcomed as new air service provider By: John Worthen Published: 10/28/2009

Approximately 50 people gathered Tuesday morning at the South Arkansas Regional Airport terminal to celebrate the return of a ir service to El Dorado.

Representatives from SeaPort Airlines, who arrived on a flight from Memphis International Airport to commemorate the occasion , w ere greeted with cheers and smiles by community members and local officials.

The Portland, Ore.

- based company will offer round

- trip flights between El Dorado and Memphis on the Swiss

- built Pilatus PC

- 12, a pressurized turbo

- prop airplane. Departure times from the SARA are 4:10 a.m., 11:20 a.m., and 8:20 p.m., according to SeaPort’s website.

SeaPort will also operate round

- trip flights to Memphis from Harrison, Hot Springs and Jonesboro.

These communities, along with El Dorado, have been without regular service since 2008, when Air Midwest, a subsidiary of Mesa Ai rlines, pulled out of the markets. SeaPort beat out several companies that submitted proposals to the Department of Transportation and signed a two

- year contract to provide the service for a $6,047,789 federal subsidy. The Essential Air Services program subsidizes airlines to provide service that wouldn’t be profitable on the open market.

SeaPort officially opened Monday in El Dorado with a 4:30 a.m. flight from SARA to Memphis International. At the ceremony Tue sda y, local officials touted SeaPort as a quality airline that will help El Dorado’s economic engine hum.

Jeff Teague, chairman of the El Dorado Airport Commission, called the day a “bright one,” despite cloudy, mist

- filled skies that had the SARA socked in.

Getting this airline “has been an arduous task, but we got the best service we could have,” Teague said. “Transportation is t he key issue in economic development, and not having air service in El Dorado for the past year or so has really not been a good thing. And now, with all that’s going on in El Dorado, with the con fer ence center and the new high school, (Sea

- Port’s arrival) is just the icing on the cake.”

Kent Craford , chief executive officer of SeaPort, called Tuesday “an exciting day for us at SeaPort. We feel that our small nine

- passenger a irplane is a perfect fit for El Dorado’s air service needs. And the fact that we will be offering three trips a day allows for better connection service and same day travel opportunities to Me mphis and beyond. We are your hometown airline.”

El Dorado Mayor Mike Dumas spoke highly of SeaPort officials and said he looks forward to working with them throughout their ten ure here.

“This is a great day for El Dorado,” Dumas said. “We have been working on this for more than a year, and it’s great to finall y h ave air service back in El Dorado. We welcome you, SeaPort, and we thank you for your service.”

More information and reservation information is available by logging on to the SeaPort Web site at www.seaportair.com.

# Rob McKinney President SeaPort Airlines 7505 NE Airport Way Portland, OR 97218 (971) 340

- 1711



# www.SeaPortAirlines.com SeaPort welcomes this opportunity to be chosen to provide essential air service at Grand Island, Nebraska for the next two year period. We bring a fresh approach, and believe we have presented a proposal that will meet the EAS needs of the communities at reasonable subsidy levels. Thank you for your consideration.

Respectfully submitted,

### Alaska Juneau Aeronautics, Inc. d/b/a SeaPort Airlines Essential Air Service Proposal Docket OST-2002 13983 Annual Subsidy Requirement May 2011 - April 2012 Exhibit 1A

Kansas City Denver Factor GRI-MCI GRI-DEN
Revenue: Passenger: Forecasted Passengers 3,500 10,500 Average Revenue / Pax:
Current: 2011 79.00 $ 109.00 $ Revenue / Pax Change 1.00% 1.00% Average Revenue / Pax 79.79 $ 110.09 $ Passenger Revenue 279,265 $ 1,155,945 $
Other Revenue: Ratio to Passenger Revenue 1.00% 1.00%
Other Revenue 2,793 $ 11,559 $
Total Revenue 282,058 $ 1,167,504 $

Operating Expenses Completed Block Hours 1,301.12 2,736.00
Direct Flight Crews 74.10 $ 96,413 202,738
Fuel
Gallons / Block Hour 74 Into Plane Cost / Gallon 6.00 $
Fuel Cost / Block Hour 444.00 $ 577,697 1,214,784
Insurance 51.00 $ 66,357 139,536
Maintenance 211.20 $ 274,797 577,843
Aircraft Lease 200.00 $ 260,224 547,200
Total Direct 1,275,488 $ 2,682,101 $ Indirect Expense 31.00% 395,401 831,451 Total Operating Exp 1,670,889 $ 3,513,552 $

Return 5.00% 83,544 175,678
Total Economic Cost 1,754,433 $ 3,689,230 $
Surplus / (Deficit) (1,472,375) $ (2,521,726) $
Annual Subsidy 1,472,375 $ 2,521,726 $ Completed Departures 1,216 1,824

### Alaska Juneau Aeronautics, Inc. d/b/a SeaPort Airlines Essential Air Service Proposal Docket OST-2002 13983 Annual Subsidy Requirement May 2012 - April 2013 Exhibit 1B

Kansas City Denver Factor GRI-MCI GRI-DEN
Revenue: Passenger Forecasted Passengers 3,675 11,025 Average Revenue / Pax
Estimate: 2012 79.79 $ 110.09 $ Revenue / Pax Change 0.00% 0.00% Average Revenue / Pax 79.79 $ 110.09 $ Passenger Revenue 293,228 $ 1,213,742 $
Other Revenue: Ratio to Passenger Revenue 1.00% 1.00%
Other Revenue 2,932 $ 12,137 $
Total Revenue 296,160 $ 1,225,879 $

Operating Expenses Completed Block Hours 1,301.12 2,736.00
Direct Flight Crews 75.58 $ 98,341 206,792
Fuel
Gallons / Block Hour 74 Into Plane Cost / Gallon 6.15 $
Fuel Cost / Block Hour 455.10 $ 592,140 1,245,154
Insurance 51.00 $ 66,357 139,536
Maintenance 221.76 $ 288,536 606,735
Aircraft Lease 200.00 $ 260,224 547,200
Total Direct 1,305,598 $ 2,745,417 $ Indirect Expense 31.00% 404,735 851,079 Total Operating Exp 1,710,333 $ 3,596,496 $

Return 5.00% 85,517 179,825
Total Economic Cost 1,795,850 $ 3,776,321 $
Surplus / (Deficit) (1,499,690) $ (2,550,442) $
Annual Subsidy 1,499,690 $ 2,550,442 $ Completed Departures 1,216 1,824

### Alaska Juneau Aeronautics, Inc. d/b/a SeaPort Airlines Essential Air Service Proposal Docket OST-2002 13983 Proposed Departure Schedules May 2011 - April 2013 Exhibit 2

Sched Sched Sched Comp Sched Block Sched Block Block Sched Comp Block City Block Sched Hours / Freq / Hours / Hours / Seg / Comp Seg / Hours / Destination Pair Time Seg Seg Week Week Year Year Factor Year Year
MCI GRI 0850 MCI 0954 1 1.07 6 6.42 333.84 312 97.50% 304 325.28
MCI 1015 GRI 1119 1 1.07 6 6.42 333.84 312 97.50% 304 325.28
GRI 1520 MCI 1624 1 1.07 6 6.42 333.84 312 97.50% 304 325.28
MCI 1645 GRI 1749 1 1.07 6 6.42 333.84 312 97.50% 304 325.28 4.28 25.68 1,335.36 1,248.00 1,216.00 1,301.12

DEN GRI 0510 DEN 0640 1 1.50 6 9.00 468.00 312 97.50% 304 456.00
DEN 0700 GRI 0830 1 1.50 6 9.00 468.00 312 97.50% 304 456.00
GRI 1140 DEN 1310 1 1.50 6 9.00 468.00 312 97.50% 304 456.00
DEN 1330 GRI 1500 1 1.50 6 9.00 468.00 312 97.50% 304 456.00
GRI 1810 DEN 1940 1 1.50 6 9.00 468.00 312 97.50% 304 456.00
DEN 2000 GRI 2130 1 1.50 6 9.00 468.00 312 97.50% 304 456.00
6 9.00 6 54.00 2,808.00 1,872.00 1,824.00 2,736.00

### Alaska Juneau Aeronautics, Inc. d/b/a SeaPort Airlines Essential Air Service Proposal Docket OST-2002 13983 Performance Summary

May 2011 - April 2012 Exhibit 3A

Kansas City Denver GRI-MCI GRI-DEN
Performance:
Rev Block Hours
Scheduled 1,335.36 2,808.00 Completion % 97.50% 97.50% Completed Block Hours 1,301.12 2,736.00 Rev Departures
Scheduled 1,248 1,872 Completion % 97.50% 97.50% Completed Departures 1,216 1,824 Rev Passengers
2011 3,500 10,500 Forecasted Growth Rate 0.00% 0.00% Total Passengers Average Segment Share 100.00% 100.00% Segment Passengers 3,500 10,500 Available Seats 10,944 16,416 Average Load Factor 31.98% 63.96% Average Pax / Flight 2.9 5.8

### Alaska Juneau Aeronautics, Inc. d/b/a SeaPort Airlines Essential Air Service Proposal Docket OST-2002 13983 Performance Summary

May 2012 - April 2013 Exhibit 3B Option 1

Kansas City Denver GRI-MCI GRI-DEN
Performance:
Rev Block Hours
Scheduled 1,335.36 2,808.00 Completion % 97.50% 97.50% Completed Block Hours 1,301.12 2,736.00 Rev Departures
Scheduled 1,248 1,872 Completion % 97.50% 97.50% Completed Departures 1,216 1,824 Rev Passengers
2012 Est Pax 3,500 10,500 Forecasted Growth Rate 10.00% 10.00% Total Passengers Average Segment Share 100.00% 100.00% Segment Passengers 3,850 11,550 Available Seats 10,944 16,416 Average Load Factor 35.18% 70.36% Average Pax / Flight 3.2 6.3